PHD Chamber expects 11 lakh crore stimulus package to weather impact of COVID-19

PHD Chamber of commerce and Industry in its short-term and long-term suggestions to the government has suggested a stimulus package of Rs 11 lakh crore from the Government to mitigate the impact of pandemic COVID-19 economy, trade and Industry.

   
FICCI relief package GDP

PHD Chamber of commerce and Industry in its short-term and long-term suggestions to the government has suggested a stimulus package of Rs 11 lakh crore from the Government to mitigate the impact of pandemic COVID-19 economy, trade and Industry.

“We appreciate Government’s proactive and fast track measures to safeguard its people, economy, trade and industry against the wild tide of pandemic COVID-19 and expect a significant fiscal stimulus of atleast 5 per cent of GDP which becomes at around Rs 11 lakh crore,” said Dr D K Aggarwal, President PHD Chamber of Commerce and Industry.

“The Government has already provided a stimulus of Rs 2 lakh crore, therefore, our expectation is for the remaining Rs 9 lakh crore in terms of various relief measures and benefits to India’s trade and industry,” he further added.

According to PHDCCI a significant stimulus in the tune of 5 per cent of GDP would help the economy to grow at around 5 per cent in the current financial year 2020-21.

The industry body also recommends the Government to increase the consumption expenditure in the economy and compromise with the fiscal deficit even if it slips by 2 to 3 percentage points in the current financial year 2020-21.

“Businesses are facing hardship as inventories are piled up working capital has been blocked, at this juncture, an automatic increase of 25 per cent in working capital without any procedure and application will reduce the stress; the increased WC should be allowed to convert into a term-loan with a provision of 3 years repayment period,” said Dr. Aggarwal.

PHDCCI short term suggestions include:
  • An immediate reduction in the lending rate by all the banks to percolate the full effect of recent 75 basis points cut in repo rate by the RBI.
  • Defer the EMIs of the term-loans for 6 months, special interest subvention @ 3 per cent p.a. in loans to MSMEs and other badly affected industries, abolish all fixed charges of all the utilities and defer utilities bills by 3 months.
  • Government to pay 75 per cent of salary of the workers of the lockdown period and employer contribution in PPFs during lock down period should be brought down to zero to ease the pressure financial burden of the industry

“Release of outstanding payments of MSMEs, from the Government and PSUs ; and refunds of GST, income tax and export incentives by the respective departments of the Government by April 15, 2020 to help them to meet their financial requirements in this extremely difficult time,” said Dr Aggarwal.

PHDCCI suggestions on long-term measures

Reduce income tax of the proprietorship and LLPs firms to the level of 25 per cent for old and 15 per cent for new companies

Reduce the customs duties on basic raw materials by at least 5 percentage points

Reduce the cost of capital with a further reduction of 100 basis points cut in the Repo Rate to enhance the competitiveness of manufacturers and exporters in international market

“We suggest rationalisation of GST rate structure by merging the 18 per cent tax slab with 12 per cent tax slab, further recapitalization of the Public Sector Banks,” said Dr. D K Aggarwal.

He also suggested that increase in government consumption expenditure and capacity building by the business firms would be crucial at this juncture to rejuvenate the economy to its potential growth trajectory of 7-8 per cent in the next few years.